Political Connections And Real Estate Firms’ Performance

There are two explanations for the political impact on enterprise development:"Efficiency Theory" and "Rent-seeking Theory"."Efficiency Theory" holders think that corporate political association can give the public the signals that enterprises have the social capital, while political association as part of corporate social capital helps companies get the key resources to the survival and development and helps to improve business performance."Rent-seeking theory" have the idea that companies need to pay a lot in order to gain political relevance and benefits, it may pay to government officials huge unproductive expenditure, not only affects the allocation of resources throughout society caused loss of social welfare, but also causing huge waste of their own resources, thus reducing business performance. Real estate is China’s national pillar industries, the real estate business and political association exists on the real estate business performance, capital market reactions that play a positive or negative impact need for further discussion.In order to solve the above problems, this paper is divided into five parts.The first part is the introduction.The second part is the literature review.The third part is the theoretical analysis and research hypotheses.The fourth part is the empirical analysis.Part five is conclusions and outlook. This article is drawn here the following main conclusions.1, Under Political Intervention, real estate macro-control policies on the real estate enterprise play a negative effect on shareholder wealth.2, Under Political Intervention, the real estate business and political association with the company short-term market performance are positively correlated.3, Under Political Intervention, the real estate business and political association with the company long-term operating performance are positively correlated.The contributions of this article may be in the following three aspects.1, Testing possibilities that the real estate companies through the establishment of political association to enhance company performance in China.2, Reveal the effect of China’s national conditions of real estate enterprises under the ultimate control of the real estate "corporate political association Performance" relationships.3, the measure of corporate executive’s political association is simplified.The conclusions of the analysis and to achieve the desired vision but look at the text of this paper in the following aspect slightly less.1, the problem of the measurement of political association.2, The endogeneity problem.